WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA), and U.S. Representative August Pfluger (R-TX-11) have introduced the Small Biotech Innovation Act, a new piece of legislation aimed at supporting small biotech companies by exempting them from the Medicare drug price negotiation program under certain conditions.
The legislation is designed to promote research and development by granting a temporary exemption from the Inflation Reduction Act’s (IRA) price negotiation requirement. Specifically, the bill allows research-intensive small biotech firms to delay one of their drugs from entering the Medicare negotiation process for one year, provided they meet specified thresholds for R&D investment.
Supporters of the legislation argue that the IRA’s current provisions fall short in supporting small biotech firms, potentially discouraging investment in cutting-edge therapies and slowing the pace of medical innovation.
The Small Biotech Innovation Act also includes a safeguard to prevent abuse by foreign entities, stating that any company owned by a foreign adversary will be ineligible for the one-year negotiation delay.
The bill is intended to incentivize continued investment in life-saving treatments while protecting the role of small biotech companies in the American healthcare ecosystem.